Apple Inc. Pulls In iPhone 8 Production

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According to a research note penned by Rosenblatt Securities analyst Jun Zhang (via AppleInsider), Apple (NASDAQ: AAPL) may pull in the mass production schedule of its upcoming iPhone 8 by a week to the "third week of September."

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The analyst attributes this possible schedule pull-in to Apple opting to forgo the inclusion of a Touch ID scanner in the display of the device.

Apparently -- and stay with me if you've heard this before -- Rosenblatt's "industry research suggests Apple will not include a fingerprint sensor in the upcoming iPhone 8 due to a low yield rate."

Some earlier reports suggest that Apple's issue with respect to its in-display Touch ID sensor was one of quality and performance -- that is, it simply didn't work right.

That indicates a fundamental problem with its very implementation, necessitating additional engineering work on Apple's part to fix the solution before deploying it.

Other reports, like the one from Rosenblatt Securities, indicate that it's a manufacturing yield issue. If these reports are true, then the solution itself works, but it's just tough to manufacture them in high volumes.

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Yield issues can be showstoppers in themselves, as massive product shortages and/or higher-than-expected costs (the two big potential impacts from low component yields) can ultimately take their toll on a company's financial performance.

In either case, it's now clear why Apple cancelled its plans to bring Touch ID to the iPhone 8: time to market.

Apple's "no-win" situation

With respect to Touch ID, Apple seemingly found itself in a "no-win" scenario.

If the problem were one of manufacturing yields, Apple could launch the new iPhone "on time" with the fingerprint scanner included, but the phone would likely be extremely difficult to get ahold of as Apple would struggle to meet high demand.

On top of that, the low yield rates on the scanning solution could lead to a big increase in costs, particularly if Apple had to toss displays with non-functioning Touch ID implementations into the trash.

If the problem were one of fundamental technology readiness, then Apple wouldn't even be able to start producing these new phones until the fingerprint scanning technology worked properly. Even then, once the scanner's design was fixed, it'd take time for Apple to ramp that technology into production.

In that scenario, Apple would be lucky to get the new iPhone anywhere close to on schedule.

As you can see, neither situation would've been particularly good for Apple.

Time-to-market versus in-display Touch ID

At the end of the day, Apple seemingly had to make a choice: Ditch Touch ID and get the phone out in reasonable quantities on time, or keep working on Touch ID but then create substantial uncertainty around the launch schedule of the new phone.

Given how dependent on iPhone the business is, and how hotly anticipated the new device is, Apple is seemingly betting that users would rather get all the innovations that it has managed to pack into its upcoming OLED iPhone sooner, but in exchange for that expediency, it will sacrifice Touch ID, rather than have them wait for an indeterminate period until the issues with the in-display Touch ID are worked out.

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.